Demand for Smartphones is Slowing, Says Apple Supplier TSMC

[Eorlas]

Demand for consumer electronics like smartphones and PCs is slowing due to continued geopolitical uncertainties and new COVID-related lockdowns in China, according to TSMC Chairman Mark Liu.

TSMC, or Taiwan Semiconductor Manufacturing Company, is one of Apple's main suppliers, responsible for the A-series and M-series chips that go in Apple devices. Liu's comments were delivered at the Taiwan Semiconductor Industry Association and were shared by Nikkei.

Customer interest in smartphones is falling in China specifically, with Liu also warning about the rising cost of components and materials. Production costs are going up for chip companies, and Liu believes the "pressure could eventually be passed on to consumers," a scenario that could also see demand impacted by higher costs.Liu said that TSMC is not changing its growth targets and is still unable to meet customers' demand with its current capacity. TSMC plans to reorganize and prioritize orders for "areas that still see healthy demand."

Signs of a dip in customer demand surfaced this week amid rumors that Apple is planning to cut iPhone SE production. Just weeks after releasing the iPhone SE, Apple allegedly told suppliers that it wants to cut back on iPhone SE production by as much as two to three million units because of a "weaker-than-expected demand," though some suppliers have refuted this report.

Article Link: Demand for Smartphones is Slowing, Says Apple Supplier TSMC

i upgraded this year because of the 120hz promotion display. the only thing past this point that would get me to care, is the total removal of the notch.

beyond that, we've really hit close to a limit point of what's functionally useful, and necessary with a pocket device. a lot of people keep saying "better cameras"...truly, with how good they already are, do you really need a better camera to take a mugshot for instagram?

i'd be pretty stoked to have a high quality fold phone. would be nice to have something that can unpack to a large screen for multimedia consumption.

 

[wanha]

I admit it - I'm not nearly as keen on smart phone news and rumors as I was, say, 5 years ago.

But this isn't Apple's fault.

The smart phone industry is one of the most fiercely contested industries in the world, and yet all smart phone makers have seemed to hit this same plateau.

It's easy to sit on the sideline and yell "make them exciting again", but each of these companies have thousands and thousands of employees trying to do just that.

But a phone is ultimately just a piece of glass with a great camera that adapts to our workflows. There is only so much you can innovate around this form factor.

Fortunately, I'm quite certain this plateau that we're currently in is simply a technological accumulation phase.

As machine learning, AI, web3, AR, VR and computing power in general advance (along with wearables and technologies we don't even know about publicly), we will unlock new technologies and products that will usher in the next wave of technological advancement - and hence excitement.

 

[AndiG]

The most recent form factor is too chunky and a bit ugly for my tastes - still using an iPhone 11 Pro. It's fast and runs the latest iOS. I don't see a need to upgrade. I was one of the people that would queue up for the new iPhone - back in the iPhone 4 days. Each upgrade did seem like a big improvement but we've reached that point in tech where there are only incremental improvements. I'll probably wait it out for a high quality but smaller phone.

I think we reached a point where every upgrade is very close to a downgrade. More Megapixels is nice for the iPhone 14 but it comes at the cost of bulkiness when the phone gets thicker and heavier.

I would buy the 11 Pro again. Apple just needs to call it "New SE" add a new CPU/5G/USB-C and they can have my money. Pricepoint $799 for 64GB is ok.

 

[nihil0]

I still use my XS (more than 3 years), it is the longest I've ever used any cellphone since 2000. Apart from weaker camera there is nothing wrong with it. Still blazing fast with latest upgrades. I will probably upgrade when iPhone 15 will come out. Probably. If it will not cost an arm and a leg.

 

[Makosuke]

Along the lines of what everybody else is saying, when a product area reaches a level of maturity, people just don't upgrade as regularly. It's inevitable. And when a product crosses a certain threshold of performance, people also just don't upgrade as regularly, because they don't need to. It's also inevitable.

Smartphones have comfortably crossed both these lines. This inflection point is of interest to industry players, sure, but it's no more news than "people generally drive a car for several years before considering buying a new one" or "people generally use their laptops for several years before considering buying a new one."

I remember being a bit surprised when I realized desktop computers had reached that point. We've been replacing some of our oldest computers at work, and even though we're on a roughly 6-year upgrade cycle, the truth is nobody is complaining about even the oldest machines, and although they don't support macOS 12 or Windows 11, they're still perfectly serviceable for office work.

More impressive still is that a bit over 70% of the desktops in my office are slower than my phone. If it had couple of monitor outputs and ethernet port, I could put it on the desk of 80% of our users and they not only wouldn't complain about the performance, for most of them it would be an upgrade.

That may be due to the stunning performance of Apple Silicon, but the reality is phones are definitely now in the category of a mature, more-than-good-enough-for-most-people technology. Just like with desktops, laptops, and cars, the average user is going to be served perfectly well for several years, and that's not a problem, it's something to brag about.

 

[leeuk321]

I only upgraded from my iPhone 7 to the iPhone 12 because I needed an all-day battery, which that provided. This does everything I need and some, all I see from new releases now are "more pixels, more colour, more speed..." It's boring.

The only upgrades I can think of that'd interest me in future iterations are huge technology breakthroughs, such as a new battery technology that makes the phone lighter and lasts 7 days on a charge (yes, we're well away from that), or a truly indestructible design that does away with cases and protective screens (that's not happening soon, either.)

I honestly can't think of anything else, other than cool sci-fi stuff like being able to project a life-like hologram (now that'd make me upgrade tomorrow!)

 

[hhsk]

Good, maybe the rising prices will end this madness where everybody upgrades their phones every year for absolutely no reason.

good but maybe not, dont forget subscription based everything is coming.

 

[necrosexy]

Modern smartphones are so fast most people are happy to keep them for 3-4 years.

3-4? Keep going …

 

[hanske68]

Psychological test:

Alcohol - Drugs - Phones - ...

 

[Xand&Roby]

Prices are unbelievable.
From iPhone X (OLED + Face ID) prices raced up again and again.
The only thing who maintain similar price of past times is something old, like SE line, or the incredibly Watch 3 (2017)/iPhone 6 (2015) renewed/iPad crap (201?).
On the other way the capitalised companies rise them value, as the subprime crisis: Apple stocks value is better of every Apple product, until the market share supports it. Then Ponzi is the rule. But who cares, “it’s capitalism, baby”.
It’s 2022, no one needs iPhone (or smartphone).
It’s not 2007.
People needs tablets with Watch sync, CarPlay, Health, a better Siri(!) and others services now centered on iPhone ‘cause it is the most revenue product for Apple, but it’s time for better products, for indipendent Watch (Jony Ive want it years ago), wearables devices and at worst tablets to replace notebook/smartphone issues.

 

[troublador]

Good, maybe the rising prices will end this madness where everybody upgrades their phones every year for absolutely no reason.

We've really reached an absurd point in our society where people feel it's a special year if they opt NOT to upgrade to the latest new iPhone for once.

Of course every first world country citizen needs a new phone every year, because why not. What could possibly be wrong with this mentality.

The self-esteem of some people is so fragile it becomes linked to things like this. They simply cannot bear being seen with an older generation. They think that not having the latest model would make them a loser. Apple seems to encourage this by always changing something – often the camera configuration but not always – so you can tell what generation someone has. It's like the whole latest trainers thing.

 

[ApplesAreSweet&Sour]

I still use my XS (more than 3 years), it is the longest I've ever used any cellphone since 2000. Apart from weaker camera there is nothing wrong with it. Still blazing fast with latest upgrades. I will probably upgrade when iPhone 15 will come out. Probably. If it will not cost an arm and a leg.

Oh, it will definitely cost an arm and a leg.

The cutting-edge features that you're expecting from iPhone 15 are more than likely to be exclusive to 15 Pro/Pro Max.

Like, it took the 8, Xr and 11 for Apple to trickle OLED down to the <$799 iPhones.

I don't see Apple doing new displays and the of sought after under-display FaceID stuff for $799 iPhones until the Pros upgrade to something even more advanced, which would be most likely only happen with iPhone 18 unless Apple switches up their upgrade schedule drastically in the coming years.

Apple would only get generous with upgrades if all iPhone sales slow drastically. I don't see that happening.

 

[leeuk321]

Well, I don't think anyone is forcing people to upgrade, are they? While I agree that almost no-one *needs* to upgrade their phone every year, clearly a lot of people *want to*....so why shouldn't they if they want to spend the money?

You make it sound like they are obliged to upgrade by an unbearable peer pressure to conform. Maybe there is some truth in that, like teenagers who "rate themselves" by ownership of the latest fashion?

I also see some posts that equate yearly product updates with a necessity for yearly upgrades. These are not related - unless you have some kind compulsive disorder that requires you to own the latest gadget. Most other people will welcome the annual improvements so that by the time they do upgrade after a few years, the new device will be significantly better than the old one.

I'm still using my 2017 iPhone 8, and it's going strong, although I am just starting to feel that it's "slowing down" due to the demands of iOS updates and increasing demands of mobile apps. It will probably last another couple of years I reckon, and then be relegated to "back-up phone" status for a few years more. It should last 8-10 years, maybe requiring a new battery soon.

I can see both sides of this. They wasn't saying people were forced, but there is/was a tendency in society to upgrade almost mindlessly. I'm seeing a shift though, in terms of my group of friends and family, of those who used to upgrade religiously on their phone contract a good number are now sticking with their phone and switching to a sim-only contract with their provider.

This shift happened around the time of the iPhone X, which marked a general leap in the smartphone industry as a whole (bigger screens, bigger batteries...).

And yes, it's a free country, and so long as people who upgrade are responsible with their old phone (i.e. sell/pass it on to someone else, or recycle if it's faulty) then why not? It keeps the economy churning away and nullifies the environmental impact.

 

[JonBOY26]

The prices for new phones is insane. I only upgrade my phone every 3 - 4 years, and when I do I only buy the iPhone model that has just been superseded. I'm currently still using a Xs Max and am not yet feeling compelled to upgrade yet - especially since the iPhone still hasn't adopted USB-C (I'm not holding my breath) to be consistent with my iPad.

 

[211]

Only reason to upgrade these days is for camera improvements, and new batteries/less thermally damaged components.

I agree. In the early days, each upgrade was significant with new hardware and software features. Nowadays, these improvements are incremental and not that noticeable for the vast majority of people. I suspect more and more people will upgrade just because the battery isn't as good as before. With innovation in phones- and tablets- plateauing, it's not surprising that Apple is looking into expanding its services for ongoing revenue.

 

[aneftp]

It’s like PCs in the 1990s. It was expensive habit. But I paid $2000 every 2 or 3 years max for new shiny PC. I probably purchased 7 PCs from 1997-2010. All averaging 2k each.

Starting with my late 2012 iMac 27 inch. That was last computer I purchased over 2k. I kept it for 7 years.

Cell phone I can see people keeping it 3 years. Than upgrading. Not because it’s outdated. But the wear and tear on the cell phones from drops etc.

 

[ApplesAreSweet&Sour]

The prices for new phones is insane. I only upgrade my phone every 3 - 4 years, and when I do I only buy the iPhone model that has just been superseded. I'm currently still using a Xs Max and am not yet feeling compelled to upgrade yet - especially since the iPhone still hasn't adopted USB-C (I'm not holding my breath) to be consistent with my iPad.

-iPhone prices are mostly insane if you upgrade every 2-3 years.

But spread out over 4-5 years, it would come to around 200-250 per year.

Yes, that's still a lot. But it's much more sensible than upgrading to an SE or $799 iPhone every 2-3 years, which I feel like most iPhone buyers with an average income are doing. Some even do it with iPhones Pro (terrible financial decision!).

Like, A13 is only going to be half the speed of the latest SoC when iPhone A17 or A18 launches, when A13 is 4-5 years old.

Upgrading before the 4-5 year mark is necessary for next to nobody as iPhones isn't anyone's 4-8k video editing or 3d rendering power house.

 

[Isamilis]

I wonder why people don't want the "new" SE... ?

I think they prefer iPhone 11 than new SE. Bigger, better camera and better battery. Or, people has higher priority on other things (due to Covid and Ukraine war impact) than having the new iPhone.

 

[snipr125]

Everyones energy prices have gone up by almost 50%, fuel prices increasing, food etc. Energy prices may go up even further because of the war in Ukraine. As a result, it’s natural that demand for luxury items like smartphones will wane. The £1000 phones will feel the pinch first.

Ironically, despite all of its its ridicule on MR, a phone like the SE2022 is exactly what people will want going forward because of its price and performance.

 

[44267547]

I think we reached a point where every upgrade is very close to a downgrade. More Megapixels is nice for the iPhone 14 but it comes at the cost of bulkiness when the phone gets thicker and heavier.

Don’t you think this ‘bulky and heavier’ belief gets exhausting to keep commenting on? I mean, consumers use cases, do you really think they’re thinking about the weight of the phone when 99% of consumers are using bulky/heavy cases? I think it’s totally negated.

I think consumers welcome large smart phones, because the trade-off is a larger display for viewing content and battery expectancy is improved. If Anything, the major hindrance is the rising cost of smart phones, I don’t suspect the weight is an issue at all. The only people commenting on the weight/bulk of an iPhone, are generally people on here.

 

[genovelle]

I may

Could care less about camera upgrades, you will get my 8 only by prying it from my cold dead hand.

Unless I drop it.

I may trade my 8 to get the new chip in the SE

 

[MacBH928]

I know, they need to add a fourth camera lens to create higher demand for newly released phones!/s

honestly, the hardware is powerful enough and we have reached market saturation. Innovation is in the software now IMO

 

[RadioHedgeFund]

Apple is using same old design from the iPhone 6 (September 2014) to sell them in 2022?

Media in 2020: "Look, Apple brought back the classic iPhone 4 design from 2010!"

Media in 2022: "I can't believe Apple is still using the same old iPhone 6 design from 2014."

 

[hydrochloride]

As machine learning, AI, web3, AR, VR and computing power in general advance (along with wearables and technologies we don't even know about publicly), we will unlock new technologies

How about simple things like automatic punctuation for dictation? Can‘t believe we still have to tell our phones when to do a comma, with all that AI processing power they got.

 

[obviouslogic]

I wonder why people don't want the "new" SE... ?

Well don’t waste your time. Demand is not “weaker than expected”. If you follow Apple at all you’ll know that these types of reports always come out when Apple cuts orders. They do so because they before they release a product, they ramp up orders to have as much as possible on stock. After the release they ALWAYS scale back manufacturing to align with demand (unless they were unable to meet original stock goals; component shortages, manufacturing/assembly issues, etc.). This is how all [most] manufacturing works.

People who are not privy to actual facts, see the drop in orders and assume the worst.